POWER-GEN(TM) Europe is coming to Hungary with view of the future

The rapidly changing nature of power generation and delivery makes current technical and business information essential for success

By Ann Chambers, Assistant Editor

POWER-GEN Europe `96, set at the Hungexpo in Budapest, Hungary, from June 26-28, is expected to draw more than 6,000 key representatives from the European power industry from 70 countries, plus 250 exhibitors. More than 150 technical papers will be presented in this pan-European conference for the total power generating industry.


Pierre Lederer and Michel-Francois Simon, both Electricit√© de France senior vice presidents, see power generation surpassing national boundaries.1 “Historically, the electric sector has evolved and has been operated in an integrated manner, within a national framework,” they noted in their joint presentation at POWER-GEN Europe `95. The electric industry in industrialized countries has had a stable operating mode around integrated systems, integrated over large areas, and regulation in a national or regional framework and controlled by national equity. This national control was often extended in these countries to include fuel suppliers and manufacturers which benefited from a protected national market. This policy was often sought by the government to limit risks in fuel supplies. Trans-border electricity trade was little-developed, and international relationships were often limited to technical cooperation and aid programs.

However, in the past decade, this traditional approach to power generation has been questioned as technological developments reached saturation levels and increases in power demand became insignificant, thus draining productivity factor gains. More questions have been raised in countries where the power generation sector is or was excessively fragmented, where regulations failed or where effectiveness of traditional operators came into doubt.

Lederer and Simon cite three major reasons national frameworks have fallen out of favor:

1. An upstream worldwide concentration in the power industry. The equipment and fuel markets are increasingly organized on a global rather than on a national scale, with the pressure accentuated on protected national supplies.

2. Wholesale electricity consumers, facing increasingly fierce competition are asking for more and more renegotiations of their electricity purchase price.

3. The enormous financing needs in some regions have driven governments, lenders and multilateral institutions to stimulate policies for competitive contracts and private capital.

Like many other branches of industry, the electric sector has been drawn into a worldwide economy, characterized by the globalization of the financial sphere and by equity mobility.

The process takes many forms, including deregulation, de-integration, competition, shift to downstream and new definitions of relationships. Opening of capital and privatization of public utilities has led to foreign shareholding possibilities and to new international alliances between electric utilities. Deregulation, de-integration and development of competition allow upstream players, downstream players and even sideline players such as bankers to enter the playing field.

The EDF executives note that public authorities have reasons to oppose the trend to internationalization, although the electric utility industry are international by nature. Examples include US firms which have been very active abroad since the 1992 Energy Policy Act, especially independent power producers (IPP). “A steam roller has thus been activated, first in Asia and Latin America where economic growth today creates new opportunities, with Western and Eastern European countries remaining under observation,” the two wrote.

International development has also taken hold in Europe as German utilities look toward Northern and Eastern Europe, British electricians concentrate on the Asia-Pacific region, Spanish electricians concentrate on Latin America, and the French go global with deals in Africa, Latin America, Asia and Europe.

Cogeneration possibilities

Focusing more on Europe, Michael Brown of Cogen Europe in Belgium, stated, “The development of cogeneration is one of the most important challenges for both the policy-makers and the power industry in Europe. The most economic and the most efficient way of producing electricity can be achieved through the development of cogeneration, and worldwide technological developments of gas turbines and gas engines have introduced new prime movers for electricity production.”2

Cogeneration also fits in nicely with environmental consciousness and the international regulatory push for greenhouse gas reduction to reduce global warming through lowered emissions.

“Europe`s new liberalizing frameworks are creating new challenges and opportunities. One the one hand, cogenerators will be able to compete more freely with the utilities,” he wrote. “On the other hand, competition will introduce new economic conditions for municipal utilities supplying both power and heat.”

Cogen Europe, an independent association for the promotion of cogeneration, was founded in 1993 by national promotional organizations in the UK, Spain, Germany, France, Greece, Portugal and The Netherlands, which have been joined by more than 60 other companies.

Cogeneration demands a different approach to power production in that it requires changing structures among public utilities. “The world of power production and distribution is on the move, and cogeneration can be developed more widely in this climate of change,” Brown said.

In the changing market, utilities are generally looking for cooperation and partnerships, and a utility serving heat needs is as important as one serving electricity needs. These two needs can be combined or partnered through cogeneration, because cogeneration is power production based on heat demand. “In the Netherlands, Germany, UK and Scandinavia a large portion of energy is used for the production of heat in many industries with a high heat demand, like refineries and chemical plants, paper mills, greenhouse horticulture and the dairy industry,” Brown noted.

Historically, electricity production and distribution has been a public service with a strong government involvement, and its rapid development over the past 40 years required high investments with long-term commitments. Investments were influenced by politics, and one of the consequences was the development of monopoly structures within the electricity sector.

Now there is a major trend toward the introduction of market influences in the electricity sector, and a wave of liberalization can be observed in Europe. Liberalization and the development of international energy markets are considered essential objectives for future development of energy policies and trends which will unlock the potential of today`s new, more efficient technologies.

“An open energy market can offer opportunities for new products and a new approach to the supply of energy. The provision of energy services will become more attractive than the traditional supply of energy,” Brown stated. “European utilities have an excellent starting position for this new market and an opportunity to develop a fresh approach to the needs of their clients.”

A private Britain

Peter Windsor, National Power`s international business director, agrees that the industry is turning global, although traditional integrated utilities are still thriving, or at least surviving, in many countries.

“Electricity privatization in Britain can now be seen as a pioneering part of these global processes,” Windsor stated. “At the time the privatization was being planned and implemented, we were certainly aware of the pioneering nature of what was being done. We searched the world, largely in vain, for competitive models that we might adopt or learn from.”3

National Power was formed out of a utility organization; but with the restructuring, it no longer had public-service obligations. The creation of a wholesale market and of rival generators meant that there was no longer a monopoly and no captive customers, Windsor stated.

The challenge then was to organize and compete as a commercial organization, which National Power has painfully done. Saddled with a generating plant surplus and facing new competition running on combined-cycle gas turbines, plus a new nuclear plant and environmental regulations, National Power streamlined staff and facilities to create an entrepreneurial, low-cost organization. But as Windsor said, change in this world never stops.

As the initial three-year contracts, which were holding its customers in place, began to expire, National Power, like many other daring or desperate power generation companies, set its sights outside of its territory and outside of its country. Current focus is on developing business in North America, Greater Europe, China, India, Pakistan, Southeast Asia and Australia.

Future success

As Windsor noted, change does not stop, but those who do not or cannot change, probably will stop eventually. And that`s what POWER-GEN is for. Top-notch plenary speakers like S. Fazakas, Hungary Ministry of Industry and Trade secretary of state; G. Hatvani, MVM Hungary board member; and F. Kindermann, European Commission DGXVII head of division will share their expertise and forecasts, as will the many engineers and technical leaders who will speak during the seven-track conference. The latest in efficiency-boosting technology and time-saving devices will be on display for utility executives looking to expand their horizons or to trim their bottom lines.

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Budapest will be home to POWER-GEN Europe `96, allowing other utilities and interested professionals to see up close the ongoing privatization of Hungary`s national electric utility, the Hungarian Power Co.

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Power-Gen Europe attracts more than 6,000 visitors from more than 70 countries to one location for a combined technical conference and exhibition.


1 Lederer, Pierre, and Michel-Francois Simon, “The Internationalization of the Electricity Sector,” POWER-GEN Europe `95, Amsterdam, The Netherlands, May 16-18, 1995.

2 Brown, Michael, “Cogeneration: A Key Role in the New European Energy Market Place,” POWER-GEN Europe `95, Amsterdam, The Netherlands, May 16-18, 1995.

3 Windsor, Peter, “Utility to IPP: Case Study of National Power,” POWER-GEN Europe `95, Amsterdam, The Netherlands, May 16-18, 1995.